Capital Gains Tax

propertyman

I'm selling my house which i have lived in for 11 years. I just got planning permmsion to build a new house next door on the same site. I wish to sell my house and the planning permission for the 2nd house together as I no nothing about building.

Do I have to pay CAPITAL GAINS TAX when I sell? If so, how is it calculated.

Any ideas would be great.

markpb

As far as I know if it's your primary place of residents, capital gains does not apply.

Jo King

You will have to pay tax based on the development value of the property. You should consult a specialist tax adviser.

propertyman

Thanks Jo,
do you know how its calculated

indiewindy

If you move into the new house you build on the same site you will have no CGT implication at all, if you don't there will be CGT payable on the site portion of the sale , but not on your house as its your PPR.

propertyman

Thats what I thought, But I was told it may not be that straight forward.

Victor

indiewindy wrote: »

If you move into the new house you build on the same site you will have no CGT implication at all, if you don't there will be CGT payable on the site portion of the sale , but not on your house as its your PPR.

I think what you are doing should work out OK, assuming you don't have a vast amount of land - the residence ruule is only good I think up to 2 acres.

You are merely building a house and moving into it and selling your old house. If you were selling the new house, that might be problematic, as you never lived there. There was a person on here a few months ago doing the reverse - building in the side garden and selling the new house. He would be liable to CGT.

Of course, always check this with your solicitor and financial adviser. Not a bunch of strangers on the internet.

Keth_tgi

Hi there,

Probably a bit late getting to you, but saw the thread and thought I'd offer some help. If you're selling the site, you maybe obliged to pay CGT on it. I think the rate is 20% at the moment. For example, if you sell it for 100,000 euro you have to pay 20,000 euro CGT.

The buyer also has to pay stamp duty when purchasing - how about that for a kicker!

My advice, if you want to make some good money - think very carefully about selling that site. If you build a house on it (if you have the full PP) and sell the house at a reasonable profit, you stand to make a hell more of a profit than selling the site outright. Not many people get this oportunity.

Also, if you sell your existing house within a year on completion of the new house (and move into the new house), you won't have to pay any CGT on the sale of the old house.

Even if you retain the old house, and sell the new one, you only pay CGT on the profit you make, less the construction cost - this is the link to a CGT calculator on the web which is excellent:
http://www.askaboutmoney.com/clubman/cgtcalc.htm

Lastly, if you do build the house, you can rent out one (which will then be deemed your investment property). hell of a pension if you keep hold of it, and have someone paying for it as they rent it out. You could rent out either of them, and live in the other.

Best of luck whatever way you go!

Keth_tgi

If you sell your house and the site separately, then you may have to pay CGT on the site. If you sell the site as part of the existing house - as it already probably is, but sell it for a price that combines both the existing house and the site explaining that the house contains FFP for another house on the site, and you should not be obliged to pay CGT - in this way your just selling a hous with a big garden.

This should work, and should be legal, but consult am architect and/or solicitor first.

You're mad not to take a year out and build via Direct labour on it and make a big profit - hell of an experience too.